Self-employed workers are at risk of their employment status being “degraded” due to working with “no rights and entitlements,” according to business secretary Vince Cable.
With self-employment higher than at any point over the last 40 years (15 per cent of the British workforce is currently self-employed)*, Cable acknowledged that “the UK has got a genuinely entrepreneurial culture”, but warned there is also “a darker side which is the hidden, highly insecure world of [self-employment]. A lot of [self-employed] are genuinely entrepreneurs. But a lot are sub-contractors in precarious employment, often working for one employer. And it represents some degree of degrading their employment status.”
Citing the recent closure of delivery firm City Link (where 2,536 employees were made redundant, along with around 1,000 self-employed), he said, “If you look at the people who are being made redundant, a lot of them have no employment status at all. There’s an artificial dividing line between employees and workers. There are a large number of people falling through the cracks… [these are] actually people working with no rights and entitlements.”
Cable was speaking at the London launch of research report Human Capital Reporting: Investing for Sustainable Growth, which argues that firms need more widespread and consistent reporting on their human assets.
Commissioned by the CIP – the professional body for HR and people development – the report found that reporting on human capital data is often unpredictable, and that investors rarely ask or value it. As a consequence, companies aren’t providing quality and consistent reports – the study found.
Helena Morrissey, from Newton Investment Management, said: “I don’t see mainstream investors taking the ‘people’ aspect of companies as seriously as they should. There’s no mention of the ‘people side’ in reports.”
“It is not only external stakeholders such as investors and regulators who benefit from more robust reporting in human capital,” the report advises. “To enable human capital to be fully and effectively valued in business decision-making, there must be a change in mindset-competency and culture within business at all levels.”
The value placed on human capital comes at a critical time: the global economy is currently being plagued by a productivity crisis, with most countries failing to improve their overall efficiency in 2013 for the first time in decades. This has been interpreted as a sign that innovation might be stalling in the face of weak demand.
“We’re now at a point where if the recovery is going to be sustained, we’ve got to start dealing with productivity growth,” said Cable. “Without productivity growth, real wages stagnate and that can’t happen…. Productivity growth is primarily about skills, development and innovation. The more you can force that message, the better.”
* ONS survey, August 2014